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Hayward gaffe fuels BP's woes as shares plunge 15%

Another £14bn off the share price, the CEO in bother, and still no sign of a solution - it just gets worse for BP...

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Published: 01 Jun 2010

Last Updated: 31 Aug 2010

Another rotten morning for BP: after its latest efforts to stem the Gulf of Mexico oil spill ended in miserable failure this weekend, its share price sank another 15% today, wiping some £14bn off its value. But as BP’s efforts to stop the oil gushing out get increasingly desperate, CEO Tony Hayward hasn’t exactly been doing his bit to win friends and influence people State-side. ‘There’s nobody who wants this over more than I do. I want my life back,’ he apparently told a US radio station – rather unfortunate, especially given that his finer feelings aren’t exactly high on US priority lists at the moment...

BP was forced to admit this weekend that its latest effort to stop the flow of oil – the so-called ‘top kill’ strategy – has failed, just like all its previous efforts have failed. Next up is a plan to use a robot to cut the damaged pipe and connect it to a new pipe that brings the oil to the surface – but since this method has never been used at this kind of depth, there’s a good chance that won’t work either. In fact, the only guaranteed solution is to drill a relief well – but that will take until August, and in the meantime, 19,000 barrels of oil continue to drain into the Gulf each day. BP has already spent the best part of $1bn on the clean-up job, and that’s before the inevitable legal claims. So it’s no wonder investors have been dumping the shares.

Meanwhile the US government is getting more and more irate; apparently it’s becoming ‘increasingly suspicious’ of BP’s claims it is being ‘frank and transparent’ on developments, after it took a day and a half to inform them that its latest tactic failed. With officials now describing this as ‘probably the biggest environmental disaster [the US has] ever faced’, Hayward’s foot-in-mouth moment hasn’t exactly come at a great time. Sympathetic as we are to the pressures of running a huge organisation embroiled in a crisis, his problems rather pale into insignificance compared to the 11 rig workers who died in the explosion, not to mention all the fisherman who are losing their livelihoods.

So things seem to be going from bad to worse. Interestingly, BP’s response has been to set up a new ‘disaster management’ arm, headed by one Robert Dudley – who you may remember as the ex-head of BP’s Russian joint venture. Admittedly Dudley managed to upset the Russians so much that he was forced to go into hiding, but we’re sure his powers of diplomacy have come on a bit since then. And with half of the US baying for blood, the idea of going into hiding might be rather tempting for Hayward at the moment too...